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August 2021
Fight Fraud Newsletter
How Fraud Detection Methods Relate to Median Loss and Duration
How you detect fraud in your company can affect the loss and duration of a crime, according to ACFE's 2020 Report to the Nations. Passively detected schemes, such as being notified by the police, obtaining a confession, or stumbling upon the problem by accident, last longer and are associated with the highest median losses compared to other detection methods.

Proactive measures, such as surveillance, IT controls, management reviews, and document reviews, are shorter in duration and have lower media losses.

External audits and tips, which can be passive or active, fall between passive and active approaches in terms of duration and losses.

For help in evaluating your fraud detection and prevention systems, contact us.
Supply Chain Theft Can Cripple Your Business
Red Flags
Supply chain theft costs U.S. businesses and consumers roughly $35 billion a year, according to Transportation and Logistics International. A low risk-reward ratio and the potential for huge gains encourage fraud and theft.

Companies that fail to put safeguards in place could be devastated. As thefts increase, the costs of goods go up and fulfillment reliability goes down. Profits start to shrink and so does market share.

Insiders pose one of the biggest supply chain threats. Employees who are under financial pressure, have the means to steal and can rationalize their actions could cause huge losses to your business.

You can counter the activity by conducting annual risk assessments. The audits should be part of a broader risk mitigation plan that includes a threat assessment, cargo and data flow, and vulnerability assessment.

Check out 23 Red Flags of Fraud to learn about other areas where your business may be vulnerable to fraud.
Who Commits Internal Fraud? You Might Be Surprised
Internal fraud often involves trusted employees, top executives and business owners. Here are some recent cases:
 
A former bookkeeper and financial manager for a San Antonio law firm recently admitted to stealing approximately $1.7M from the firm’s accounts. She used office credit cards to make non-firm-related purchases totaling over $1.2M. She also stole roughly $417K by withdrawing from the firm’s bank account over 200 times during a two-year period.

Last month, the owner of a Brooklyn, NY construction business pled guilty to failing to pay nearly $256K in payroll taxes. He hid cash payments from the firm’s tax preparer causing the accountant to prepare returns that underreported wages and payroll taxes owed.
 
In May, a former Netflix executive was convicted of fraud and money laundering after orchestrating more than $500K in bribes and kickbacks. He used his position to create a “pay-to-play” scheme where he approved contracts with outside tech firms in exchange for taking bribes and kickbacks.
 
In April, a former Obama White House advisor was arrested after stealing $200K from charter schools he founded. He was charged with fraud, money laundering and making false statements to a bank.
How We Can Help

IAS can help you identify, deter, investigate and resolve fraud in your company. We can audit your internal controls, create a loss prevention and internal audit program, conduct loss prevention workshops, and most importantly investigate suspected fraud.

Our investigations can obtain signed confessions, restitution and even prosecutions.
View the IAS Newsletter Archive
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Phone: 561.602.0571
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